Eight Nyeri coffee factories face auction over Sh163m debt

Eight coffee factories affiliated to Rumukia Cooperative Society in Nyeri are set to be auctioned by their lender over unpaid debts amounting to Sh163 million.

Taifa Sacco through Green Bell Auctioneers seeks to reclaim farmers’ assets in all the factories under the cooperative to offset the debts that have pushed it to its knees.

The auctioneers have been ordered to collect farmers' parchment worth Sh16 million, weighing machine worth Sh400,000, pulping machine and other office equipment worth Sh1.2 million in order to recoup the sacco's money.

Over the years, the management of the cooperative has been borrowing money from lenders to pay farmers while selling their produce to offset loans.

Farmers from the cooperative had already stopped delivering their produce to the factories due to poor payment for their parchment and resorted to hawking it. Other farmers uprooted their coffee plantation while others chose to deliver their produce to better paying factories in neighbouring sub-counties.

Lack of professionalism, over-borrowing and poor managerial skills have been cited among reasons that have contributed to the running down of the factories.

Rumukia was among the top paying society in the county per kilogramme of coffee delivered to either of the factories.

A forensic audit conducted last year showed that the borrowings were secured against land titles as well as coffee proceeds.

“County government should ensure that the management committees strictly adhere to the procedures of borrowing and operate with properly approved borrowing powers as stipulated by the Cooperative Society rules,” the report stated.

It also recommended that cooperatives should operate within their means to avoid huge costs with external borrowings.

Coffee societies are expected to ensure that the borrowings are as per the approved budgets and within their ability to repay the loans but most cooperative do not adhere to this directive.